What are the Best Investments if the Market is Crashing?
Investing during a market crash can be challenging, but it's also an opportunity to come out stronger with a carefully planned strategy. In this guide, we'll explore a variety of investment options and discuss how to protect and grow your wealth effectively.
Understanding Market Crashes
When considering the best investments during a market crash, it's important to first understand the different types of markets you might be referring to. These can include the stock market, money market, derivatives market, FX market, and more. However, regardless of the specific market, being a Long-Term (LT) investor with a broad vision for forecasting different events can be highly beneficial.
Strategies for Wealth Preservation
One effective strategy, especially for people expecting a market crash, is to invest in value assets. This approach involves selecting assets that retain their value or even increase in value during economic downturns. Here are some key strategies:
Investing in Value Assets
Value assets, such as real estate, can provide a stable base for your investment portfolio. Unlike stocks, real estate often offers tangible benefits like a place to live and feel safe. Additionally, real estate can offer income through rental properties.
Exploring Alternative Markets
When the stock market is down, it might be wise to look at alternative investment markets. For instance, endowments from prestigious schools like Harvard have shown promising results over the years. According to Morgan Stanley, private markets are expected to grow significantly, from $7.2 trillion in 2020 to $12.5 trillion by 2025.
Blue-Chip Art Market
Another intriguing option is the Blue-Chip Art market. This market has proven to be resilient during economic downturns. For example, a Basquiat painting that was bought for $5,000 in 2017 eventually sold for $110.5 million in 2017, making a significant profit. This example highlights the potential for lavish gains in the art market.
The Blue-Chip Art market has several advantages:
Low correlation to equities: Art prices don't necessarily drop when the stock market does, making it a safer bet. Rapid appreciation: Since 1995, contemporary art price appreciation has outpaced the SP 500 by nearly twofold. Growing demand: Art transaction volumes are at an unprecedented high, driven by wealthy families and institutions. Securitization: Regulations have enabled the securitization of art, allowing everyday investors to participate in this market.Securitized Art Investments
To make art investment accessible to more people, companies like Masterworks have developed securitized art platforms, enabling ordinary investors to invest in famous artworks by renowned artists such as Picasso, Banksy, and Basquiat. This democratization of art investment can be an attractive option for those seeking alternative assets.
Conclusion
Investing during a market crash requires a strategic approach. Whether you choose to invest in value assets, alternative markets like private equity, or the Blue-Chip Art market, the key is to diversify your portfolio and keep a long-term perspective. By exploring these investment options, you can better protect and grow your wealth during challenging economic times.